The Way Out of the Housing Crises

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Federal Open Market Committee, lowered its target for the federal funds rate, which regulates overnight loans between banks, to 3.5 percent, from 4.25 percent

Federal Open Market Committee, lowered its target for the federal funds rate, which regulates overnight loans between banks, to 3.5 percent, from 4.25 percent

This extraordinary move hasnt happened since 1984...almost a generation has passed. This should help the markets which are beginning to panic and seriously sell off, further adding to negate psychology. These things can be self fulfilling and so the Fed stepped in with a huge rate reduction and before the meeting, no doubt tied to the MLK holiday sell off in Europe and Asia, quite drastic for such a conservative organization.

My opinion is that only the banks and lenders can really save the day. We have 450 Billion in ARM's due to reset between now and 2011. Since many of these loans will increase monthly costs by 30-50% just as the value of this asset declines, Im sure we will find too many homes, a drag on prices and recovery, as they dump onto the market.

If the lenders insist on being paid, they will force this on all of us. Some lenders are beginning to renegotiate loans and others are attempting to allow people to stay in their homes by accepting some of the debt as a lien on the property, hopefully to be repaid during better times.

This is the way out of the problem that doesnt rely on bail outs or hand outs that will never come. Let the lenders join us in the pain and help us wait it out. We can settle up when this crisis has passed.

Thanks for Reading
Howard Bell
www.yourpropertypath.com

How Much Will The Fed Lower Rates This Month

The Fed meets at the end of the month and there is some good news on tow fronts. First, Bank of America will buy a major mortgage company instilling a little confidence back into the system

Fed Chairman Bernanke says "We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks."

The stock markets are expecting a reduction of 1/2%. The short term rate is stands at 4.25% today according to the Freddie Mac site.

1. 30-year fixed-rate mortgage: averaged 5.87 percent with an average 0.4 point for the week ending January 10, 2008, down from last week when it averaged 6.07 percent as well. Last year at this time, the 30-year FRM averaged 6.21 percent.

2. 15 -year fixed-rate mortgage:year this week averaged 5.43 percent with an average 0.4 point, down from last week when it averaged 5.68 percent. A year ago at this time, the 15-year FRM averaged 5.96 percent.

3. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs): averaged 5.63 percent this week, with an average 0.5 point, down from last week when it averaged 5.78 percent. A year ago, the 5-year ARM averaged 6.03 percent.

4. One-year Treasury-indexed ARMs: averaged 5.37 percent this week with an average 0.4 point, down from last week when it was 5.47 percent. At this time last year, the 1-year ARM averaged 5.44 percent

This is becoming a good time for Refi's and remember that the mortgage business is soo bad that you should say NO to all junk fees.

Thanks for Reading

Howard Bell

www.yourpropertypath.com